A classified report alleged that a major defense contractor might be charging unfair rates for an engine maintenance program.
The Pentagon Inspector General found that taxpayers might be getting ripped off by Pratt and Whitney, and that the contractor has been improperly withholding information from the Defense Department.
The Air Force “does not know whether the $1.54 billion already spent” on the deal through October 2014 “is a fair and reasonable price,” the inspector general found, but service branch currently intends to see out the contract over the next seven years.
The findings were released through a declassified summary. The full report is designated “For Official Use Only.”
According to the OIG, the problem is centered on a bureaucratic distinction. Both Pratt and Whitney and Air Force contracting officers failed to provide evidence that supported designating the engine sustainment deal as a “sole-source, commercial service.”
Under the terms of such deals, “suppliers may exploit the lack of competitive markets and demand unreasonable prices,” the report notes.
“In this case, Pratt and Whitney increased its negotiation leverage by refusing to provide critical information that the [Air Force] needed to evaluate the prices for the F117 engine sustainment services.”
The OIG recommended that Air Force contracting officers collect the required information to deem the contract as a commercial service. If they can’t, it said, then the contract should be deemed non-commercial–a move that could lower the cost of the deal.
In addition to the contract at the heart of the dispute, the OIG called for contract officers to report Pratt and Whitney’s “refusal to provide information” and recommended “establishing a policy for oversight of future [Air Force] contracts or subcontracts with Pratt and Whitney.”
The OIG additionally urged the Air Force to forego using the contractor for F117 engine sustainment services unless “Pratt and Whitney provides the necessary information to support commerciality or fair and reasonable price determinations.”
While this is the latest problem Pratt and Whitney, it’s not the most well known. The long-maligned F-35 program, which depends on a different Pratt and Whitney engine, the F-135, is almost a decade behind schedule and billions of dollars over-budget.
The entire fleet of F-35 test jets was grounded for a few weeks over the summer after one suffered an unknown engine fire in June.
The F-117 engines power C-17 Globemaster III transport planes made by Boeing.
